Income Statement and Retained Earnings The Senger Company presents the following partial list of account balances taken from its December 31, 2007 adjusted trial balance:
|
Sales (net) |
$124,000 |
|
Interest expense |
3,700 |
|
Cost of goods sold |
66,200 |
|
Operating expenses |
$30,400 |
|
Common stock, $5 par |
22,000 |
|
Retained earnings, 1/1/2007 |
45,800 |
The following information is also available for 2007 and is not reflected in the preceding accounts:
1. The common stock has been outstanding all year. A cash dividend of $1.28 per share was declared and paid.
2. Land was sold at a pretax gain of $6,300.
3. Division X (a component of the company) was sold at a pretax gain of $4,700. It had incurred a $9,500 pretax operating loss during 2007.
4. A tornado, which is an unusual and infrequent event in the area, caused a $5,400 pretax loss.
5. The income tax rate on all items of income is 30%.
6. The average stockholders’ equity is $90,000.
Required
1. Prepare a 2007 multiple step income statement for Senger Company.
2. Prepare a 2007 retained earnings statement.
3. Compute the 2007 return on stockholders’ equity (net income Xaverage stockholders’ equity).